Much lower energy prices are playing out in different ways across Canada, but one place where the impact is likely to be the most prominent is Alberta's oil-heavy economy.
Many economists have slashed their growth expectations in recent months as the price of a barrel of oil has nosedived from $105 US as recently as June to under $50 today. But in a recent report, the Conference Board of Canada said the province faces more than just a slowdown — it could see an actual recession.
"Going forward, the province is certain to suffer, especially on the employment front, from the drop in oil prices — and it is likely to slip into recession," Daniel Fields, an economist at the not-for-profit research organization, said in a recent report.
Many provincial governments, and indeed the federal government, have benefited from high energy prices since the recession. But none are so reliant as Alberta. Edmonton relies on oil royalties for about a quarter of its revenues.
It's not just governments that are expecting leaner times. Companies in the real economy that have spent billions expanding the Athabaska oilsands are cutting back.
Late last year Total S.A. postponed its Joslyn oilsands project, while Statoil put the brakes on a Kai Kos Dehseh project. In December, Husky and Penn West both trimmed their spending budgets by billions of dollars. And just yesterday, Canadian Natural Resources, the giant of the space, slashed about $2 billion from what it plans to spend in the oil patch this year.
All those lost dollars are likely to trickle down into fewer jobs, compounding the pain. Shell announced Friday that it was trimming 200 positions.
Some oil patch watchers are bracing for more, as the last time oil prices cratered like this was in the recession of 2008.
"Engineering investment in the province nosedived by about $18 billion, some 30,000 jobs in Alberta’s mining sector disappeared, and housing starts fell 75 per cent," Fields said.
The Conference Board's chief economist Glen Hodgson will be a guest on The Exchange with Amanda Lang on Tuesday to give more details of his analysis.Suggest a correction